What Is the Difference Between a Living Trust and an Estate Account?

Accounts for estates and living trust are used the same, just set up differently.

The primary difference between a living trust and an estate account is when they are opened. An account for your living trust will be opened during your lifetime, while an estate account is opened only after a probate case is started.

Living Trust Account

As part of the set-up process for a living trust, your assets, such as bank accounts or stock accounts, must be transferred into the trust. You will take a copy of the living trust to your financial institution and request transfer of the accounts from your name individually to your name as trustee of your living trust.

Estate Account

Estate accounts are opened upon the asset holder's death, after the executor of the estate has been appointed by the probate court. The executor takes a copy of the probate court's order of appointment to the financial institution and transfers the funds from the decedent's account to the estate account.

Tax ID Number

For a living trust account, you will continue to use your Social Security number as the account tax identification number. For an estate account, the executor will have to obtain a new tax identification number from the IRS.

Living Trust Account Duration

The living trust account will stay open during your lifetime and then be disposed of according to the terms of the trust after your passing.

Estate Account Duration

The estate account will stay open for the duration of the probate case and be closed along with the final order of the probate court for distribution of the estate assets.

References

• FindLaw: Setting Up and Maintaining a Trust
• BankingQuestions.com: How to Open an Estate Account
• Congressional Federal Credit Union: Estate and Trust Account